BG signs production-sharing contract with CNOOC

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 30 -- CNOOC Ltd.’s parent China National Offshore Oil Corp. signed a production-sharing contract with BG International Ltd. (BG Group) for Block 63/16 in the Qiong Dong Nan basin in the western South China Sea.

The block, which covers 2,623 sq km, lies in 90-165 m of water. Under the contract BG Group will conduct 3D seismic survey and exploration drilling and bear all exploration expenses. CNOOC has the right to participate in up to 51% working interest in any commercial discoveries in the block.

Earlier this month, CNOOC announced its partner Husky Oil China Ltd. made a deepwater gas discovery, LiuHua (LH) 34-2, representing another significant breakthrough in deepwater exploration in the South China Sea.

Following Liwan (LW) 3-1, LH 34-2 is the second deepwater gas discovery in the Pearl River Mouth basin in the eastern South China Sea.

LH 34-2 was discovered on Block 29/26. The discovery well LH 34-2-1 is 23 km northeast of LW 3-1 gas field. The well was drilled in 1,145 m of water to a total depth of 3,449 m.

During drill stem tests, the well produced 55 MMcfd of gas. To determine the full potential of the LH34-2 field, Husky plans to drill an appraisal well in early 2010.

CNOOC has the right to participate in up to 51% working interest in any commercial discoveries on Block 29/26.

Contact Eric Watkins at hippalus@yahoo.com.

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